DCC issues IT distie profit warning

Price deflation and difficult trading

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Shares in Irish business services group DCC fell sharply yesterday following a profits warning from the company.

IT made up 21 per cent of the firm's operating profits last year and news that the division was struggling knocked ten per cent off DCC shares. The company said poor trading got worse in July and August.

Gem Distribution, its UK business which distributes games and retail software, has been hit hard by the decline in retail consumer spending. The games market is expected to pick up with the arrival of Microsoft's Xbox 360 later this year but this is unlikely to have an impact on trading.

DCC's UK and continental distribution businesses Micro Peripherals and Distrilogie have also been hit by price deflation and difficult trading.

DCC warned that group profits, and earnings per share, for the six months are likely to be down by as much as ten per cent. The company's energy, food and business services divisions are all performing well.